Should the advance feright be charged with gst component

Hi Mekhala! Regarding your question on whether GST should be charged on advance freight and the debit note for the same, here’s a clear explanation:

Should GST be charged on advance freight?

Yes, GST is applicable on freight charges, including advance freight, if the freight is part of the supply of goods or services.

Key points to consider:

1. Freight as a supply of service:
   Freight or transportation charges are considered a supply of services under GST and are taxable.

2. Advance freight is also taxable:
   Whether freight is collected in advance or later, GST applies on the freight amount.

3. Pure Agent Exception:
   GST exemption as a pure agent applies only when you are reimbursing the freight cost paid directly by you on behalf of your client, and you pass the exact amount without any markup, and there is a valid agreement with the client for this arrangement.

   • You must issue a separate invoice from the transporter to you.

   • You should maintain documentation confirming your role as a pure agent.

   • If you are just collecting freight charges from your buyer and not reimbursing an actual expense, you cannot treat yourself as a pure agent.

4. Debit Note for advance freight:
   Since you have not charged GST on the initial transaction for freight and now the buyer wants a debit note, you can issue a debit note charging GST on the freight amount as per GST rules.

Summary:

Recommendation for your case:

• Charge GST on advance freight through a debit note.

• Ensure freight charges and GST are clearly mentioned.

• If you want to treat freight as a pure agent cost, you need valid transporter invoices and a proper agreement — otherwise, GST must be charged.